'Arrogant' private health changes could hit less wealthy hard

Big changes are coming to private health insurance that are meant to make things simpler but doctors and patients say Australians could be caught out by the new four-tier system.

"I don't think they're going to simplify anything at all, in fact I think they're going to make it more confusing," former health insurance lobbyist Russell Schneider said.

Currently Australians have 70,000 different products to choose from. The changes will group them into four categories – "gold" for top cover, "silver" for mid-range, "bronze" for lower cover, and "basic".

Dr Matthew Scott-Young is a spinal surgeon whose field will be one of the hardest-hit by the reforms.

"People like the reliability and certainty with their insurance and these changes, while in good faith, don't deliver that," he said.

The silver category will only cover basic spinal treatments but costly procedures such as spinal fusion surgery will be restricted to gold policies.

"The analogy would be that a lady who was pregnant came into hospital to deliver their child through natural birth, but unfortunately there was a complication such that a caesarean section had to be done and they found out they weren't covered," Associate Professor Scott-Young said.

After a career in construction, 45-year-old Ben Lonnie has severe back pain and requires three discs to be replaced. He currently has mid-range cover costing $191 a month that does include spinal fusion surgery. Under the changes, he would need to upgrade to top level gold cover, which he can't afford.

"I don't think it's fair, the level of arrogance for one person or a group of people to say, 'This whole bunch of people can't have their procedure, but all you rich people up here can'," Mr Lonnie said.

Back pain contributed to the retirement of Former V8 Supercar champion Russell Ingall in 2014.

Two months ago he had spinal surgery and now the 54-year-old feels like a new man.

Mr Ingall is one of the few who could still afford the gold level premiums, but he said he feels for those who can't.

"To segment it so much, almost put it in a class, I think is wrong," he said.

"For someone who can't get it done, what are they going to do for the rest of their life? They'll have to put up with this, and it doesn't get better."

The outcome is that those affected will end up waiting for a bed in Australia's already overburdened public system.

Mr Schneider has been one of the architects of Australia's private health insurance landscape during the past three decades.

He said the system needed a complete overhaul - returning to the old structure with just one level of cover for everyone.

"Australia's got the best healthcare system in the world. Unfortunately, what's happening at the moment is the health funds are stripping value out of the product and making it less attractive to take it out," Mr Schneider said.

He also wants to eradicate those nasty gaps you have to pay even when you do have cover, by ordering hospitals to restrict doctors from charging any more than the agreed health fund benefit for a procedure.

"Don't bill the patient extra," Mr Schneider said.

"If the hospital wishes to pay the doctors more to attract the doctors to that hospital, they're free to do that but the patient wouldn't pay anything out of their pocket."